Shares of Pfizer Inc. were smacked Monday on the news that it was halting all clinical development on the successor to its best-selling cholesterol lowering drug, Lipitor, over safety concerns.

The drug, torcetrapib/atorvastatin, known as torcetrapib was pulled after independent safety monitors determined there was an unexpectedly high death rate during a key clinical trial. Atorvastatin is the generic name for Lipitor.

The main problem for Pfizer is that the drug was being developed as a possible successor to Lipitor, which had been the company's revenue driver. Lipitor is the world's best selling branded prescription drug, with 2005 sales a whopping $12.9 billion. This amounts to about 25% of Pfizer's total sales.

Pfizer had been hoping the new drug would continue the Lipitor bonanza. The problem: Lipitor loses its patent protection in 2010, which is right around the corner. On top of this negative news, Pfizer's sales have recently been hit on other important drugs’ patent expirations, Zithromax and Zoloft. We are now talking about a triple whammy!

As a result of all this, Pfizer has announced that it doesn't see revenue growing until 2009. This is something Wall Street does not want to see — it hates negative surprises. Employees are also in for some bad news as Pfizer all but telegraphed accelerating layoffs as part of its ongoing restructuring. Just last week, Pfizer announced that they were going to cut 20% of their sales force.

Most analysts are not worried about the next year or two; they are now worried for down the road. This drug was expected to be important because it was going to cover the massive hole left by Lipitor's patent expiration. Earnings are now in question going further out.

Pfizer is affirming its recent forecasts but could also have another problem near-term called credibility. Pfizer's timing, to say the least, is horrendous. Just a few short days ago, they held an analyst meeting telling everyone how well things were going with the new drug in trials. Just a couple of days later, they throw this bomb to Wall Street.

If there is anything Wall Street does not like, it is not being able to depend on a company's words and then to be buried with those words just a few days later. Many are not sure if Wall Street is going to forgive Pfizer so quickly, and many believe it will cast a skeptical eye the next time Pfizer officials open their mouths again.

Gary Kaltbaum is the president of money management firm Kaltbaum & Associates and the host of "The Investor's Edge," a nationally syndicated radio talk show about the stock market and investing. He is a Fox Business News contributor and can be seen frequently on "The Cost Of Freedom" business block.

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